Risk assessment checklist - Revenue · PDF fileRisk assessment checklist - Revenue cycle Risk assessment tools for effective internal controls - a Compliance and Best Practices Guide

Risk assessment checklist - Revenue cycle

Risk assessment tools for effective internal controls - a Compliance and Best Practices Guide from First Reference Inc.© 2008-2010 First Reference Inc. All Rights Reserved. 1

Check “Yes” or “No” or “N/A” (where not applicable). Where a No is indicated, some action may be required to rectify the situation. Cross-references (e.g., See FN 1.01) point to the relevant policy in the First Reference Internal Control Library. FN = Finance & Accounting PolicyPro, Volume 1; GV = Finance & Accounting Policy-Pro, Volume 2; OP = OMPP policies in FAPP electronic version; IT = Information Technology PolicyPro; NP = Not-for-Profit PolicyPro.

Revenue Cycle risks to consider Yes No N/A Comments / Action Required

Rev1 Are employees engaged in sales, handling cash and managing receivables competent for their assigned tasks, adequately trained and super-vised? See OP 4.06, 6.06

Rev2 Are sales terms and policies regularly commu-nicated to staff? See FN 1.01, 1.02, 1.03, 1.04, 1.07; OP 6.06

Rev3 Are there controls built into point-of-sale pro-cesses to reduce risk of loss due to fraud, theft or accounting error? See FN 1.01

Rev4 Are customers informed (with store signs, etc.) that they should obtain receipts for every sale? See FN 1.01

Rev5 Are cash register sales totals reconciled to sales and cash receipts totals? Is approval documented? See FN 1.01

Rev6 Is the sales journal/subledger reconciled to the G/L? See FN 1.01

Rev7 Are customer orders handled efficiently and accurately? See FN 1.02

Rev8 Do you use current pricing and inventory information? See FN 1.02

Rev9 Do controls exist to prevent unauthorized changes to standard price lists and customer master files? See IT

Rev10 Do you perform an independent matching of daily deposit totals to cash receipt records? See FN 1.02, 5.02

Rev11 Do you use a standard price list for invoice preparation, and require documentation and approval for exceptions? See FN1.02




Rev12 Does your system track order forms and do you follow up on those not processed in a rea-sonable time frame? See FN 1.01, 1.02

Rev13 Do you verify customer order information with appropriate sales and marketing person-nel and contact customer if needed? See FN 1.02, 1.03

Rev14 Is a credit limit established for each customer? Do you ensure that no goods are shipped or services provided that exceed the limit with-out management approval? See FN 1.02, 1.04

Rev15 Do your credit information systems provide accurate approved credit limits, current bal-ances due, age of receivables and other impor-tant information? See FN 1.01, 1.02, 1.03, 1.04

Rev16 Do you review shipping documents for com-pleteness and compare to customer order for accuracy before shipment? See FN 1.02, 3.03

Rev17 Does your system track shipping documents and do you investigate missing documents? See FN 1.02

Rev18 Do you use standard shipping and contract terms and communicate non-standard terms to accounts receivable? See FN 1.02, 1.03

Rev19 Do you match orders, shipping documents, invoices and customer information and inves-tigate missing or inconsistent information? See FN 1.02, 1.03

Rev20 Do you have procedures/system checks to prevent the same invoice being issued twice? See FN 1.02

Rev21 Do non-routine sales (e.g., sales of scrap, sales to employees) require supporting documenta-tion and approval? See FN 1.02

Rev22 Do you produce a monthly report on pricing exceptions and non-routine sales? Is it re-viewed by management? See FN 1.02

Rev23 Do you use written sales contracts? Do they clearly identify the terms and conditions of the sale? See FN 1.03




Rev24 Do you have clear, well-understood and en-forced credit policies? See FN 1.04

Rev25 Is the customer credit limit reviewed on a regular basis and changes made as required? See FN 1.04

Rev26 Is credit approval independent of the sales and accounts receivable functions? See FN 1.04

Rev27 Are your sales commission policies clear and equitable? See FN 1.05

Rev28 Do you have clear, well-documented warranty and guarantee policies? Are they understood by the staff who administer them? See FN 1.06.

Rev29 Do you have consistent customer refund poli-cies, and are they followed by staff? See FN 1.07.

Rev30 Do you monitor customer returns or billing disputes relating to products delivered but not ordered? See FN 1.07

Rev31 Do you authorize credit memos using indi-viduals independent of the accounts receivable function? See FN 1.07

Rev32 Does your system track credit memos and do personnel independent of the accounts re-ceivable function match them with receiving documents? See FN 1.07

Rev33 Do you monitor and follow up on accounts receivable consistently? Do you have a policy that outlines the process? See FN 1.08.

Rev34 Do collection staff take timely action on over-due accounts? See FN 1.08

Rev35 Do you ensure that the preparation and mail-ing of statements is not done by the receiv-ables clerk? See FN 1.08

Rev36 Do you mail customer statements periodically, and resolve disputes using personnel indepen-dent of the invoicing function? See FN 1.08




Rev37 Do you monitor the number of customer complaints regarding improper statements or invoices? See FN 1.08

Rev38 Do you review correspondence authorizing returns and allowances? See FN 1.08, 7.05

Rev39 Do you have written policies and procedures governing the recognition of revenue for ac-counting purposes? See FN 1.09

Rev40 Are revenue recognition policies clearly communicated to accounting and operations personnel? See FN 1.09

Rev41 Do procedures exist to ensure revenue is recorded in the appropriate accounting period (cut-off)? See FN 7.05

Rev42 Do you reconcile the accounts receivable subsidiary ledger with sale and cash receipts transactions? See FN 1.09, 7.05

Rev43 Do you have strong, well-documented con-trols governing pricing and discounting? See FN 1.10

Rev44 Do you have documented procedures for cal-culating, collecting, and remitting sales taxes? See FN 1.11

Rev45 Do you provide timely and accurate informa-tion needed by management and others to discharge their responsibilities? See FN 1.12, 2.12, 2.14, 3.05, 3.06, 7.01, 7.02, 7.03

Rev46 Do you prepare financial reports on a timely basis and in compliance with applicable laws, regulations, rules or contractual agreements? See FN 1.12, 2.12, 2.14

Rev47 Do you ensure completeness and accuracy of accounts receivable? See FN 1.12

Rev48 Do you regularly produce a sales report show-ing sales by customer, product line, region, di-vision, etc., including comparisons to budget and/or prior periods? See FN 1.12




Rev49 Do you regularly produce a report showing sales returns and allowances? Does manage-ment investigate unusual variances? See FN 1.07, 1.12; GV 6.02

Rev50 Do you regularly produce a report analyz-ing sales, cost of sales and gross profit against budget and/or prior periods? See FN 1.12

Rev51 Does management regularly (at least monthly) compare budgeted sales to actual sales and investigate variances? See FN 1.12, 7.02

Rev52 Does management regularly (at least monthly) review gross profit ratios and sales trends and document reasons for variances? See FN 1.12, 7.02

Rev53 Does management regularly review period end/major transactions to ensure revenue rec-ognition policies are being followed? See FN 1.09, 1.12, 7.02

Rev54 Does management regularly (at least monthly) review pricing exception reports and follow up when needed? See FN 1.02

Rev55 Does management regularly (at least monthly) review a reconciliation of aged receivables to control accounts? See FN 1.12

Rev56 Does management investigate significant overdue customer accounts and follow up as necessary? See FN 1.08

Documents

Risk assessment checklist - Revenue · PDF fileRisk assessment checklist - Revenue cycle Risk assessment tools for effective internal controls - a Compliance and Best Practices Guide